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Monday, September 22, 2008

Value In Action: Dundee Corp

Dundee Corp (DC.A) is a majority owner in several business lines consisting of wealth management, real-estate and natural resources.

At the end of 2002, it had a market cap around $350 million, but it had net assets (assets less liabilities) of $480 million, and was profitable. These stats alone show only a low Price to Book value; one must still investigate the assets to determine whether the real value of those assets can be determined.

In the case of Dundee, pretty much all the assets consisted of client receivables and an investment portfolio consisting of mostly public companies which had an aggregate market value which was higher than the book value at which Dundee was listing them. These details can be seen in the company's annual report.

As such, it would appear that Dundee traded at a substantial discount to its intrinsic value. An astute investor who recognized this price/value discrepancy by April 2003 (enough time to have knowledge of the Dec 2002 accounting statements) saw Dundee shares double from $13.50 to $27 by April 2004.